The validity of the Composition Scheme in GST is not indefinite and is subject to certain conditions.
The following are the validity conditions for the Composition Scheme:
- Annual turnover: A business is eligible to opt for the Composition Scheme if their annual turnover in the previous financial year did not exceed Rs. 1.5 crores. For businesses operating in the North-Eastern states and Himachal Pradesh, the threshold limit is Rs. 75 lakhs.
- Ineligibility: Certain types of businesses, such as manufacturers of ice cream, pan masala, and tobacco products, are not eligible to opt for the Composition Scheme.
- Voluntary withdrawal: A business registered under the Composition Scheme can voluntarily withdraw from the scheme by filing an application in FORM GST CMP-04. However, they cannot opt for the Composition Scheme again for the next financial year.
- Mandatory withdrawal: A business registered under the Composition Scheme will have to withdraw from the scheme if their annual turnover in the current financial year exceeds the threshold limit of Rs. 1.5 crores or Rs. 75 lakhs in case of businesses in the North-Eastern states and Himachal Pradesh.
It is important for businesses registered under the Composition Scheme to keep track of their turnover and comply with the validity conditions to avoid any penalties or fines.
